New Medicaid Rule Threatens Health Coverage For Arizonans With Serious Illnesses

Medicaid and the Arizona Health Care Cost Containment System (AHCCCS) are crucial to keeping Arizonans healthy. AHCCCS provides health insurance to approximately 1.8 million Arizonans. Roughly 25% of those enrollees receive coverage through Medicaid expansion. For many of them, keeping that coverage is about to become much harder.  In June, the Trump Administration released a final rule implementing Medicaid provisions in H.R. 1, which dictates that Medicaid expansion recipients exempt from harsh eligibility requirements due to medical frailty must prove every six months that they are still too sick to work – twice as often as under previous policy. The rule applies to the expansion population and creates a major administrative burden for enrollees. Experts estimate that up to 400,000 Arizonans could lose Medicaid coverage because of the new requirements. Overall, Congressional Republicans have cut over $1 trillion from Medicaid and the Affordable Care Act to offset the cost of extending and expanding tax breaks that benefit billionaires and corporations.

New Rule Makes Medicaid Requirements Harder To Navigate

The Republican Tax Law’s (H.R.1) harsh Medicaid requirements apply to individuals between the ages of 19 and 64 who qualify for coverage under Medicaid expansion, which offers insurance for individuals who make up to 138% of the federal poverty level. Many expansion enrollees work in low-wage jobs that do not sponsor health insurance.

The rule both narrows who qualifies as “medically frail” and makes it harder to prove eligibility. Currently, anyone who falls under the definition of “medically frail” is exempt from work requirements. The new rule adopts a stricter definition of medical frailty, tying it to an individual’s ability to meet community engagement activities, like work or volunteering. The federal government has provided little guidance on how states should determine if someone is medically frail. Rather than using existing health records to identify many eligible patients automatically, states will increasingly have to evaluate people one by one. More individualized assessments mean more required provider visits, more paperwork, more red tape – so individuals who would likely qualify for exemptions will fall through the cracks. For vulnerable groups in Arizona, this rule will force difficult decisions. Under the new rule, diagnoses such as cancer, HIV/AIDS, or end-stage renal disease no longer automatically qualify someone for an exemption, leading sick Arizonans to lose needed health care.

Some states, like Arkansas, have implemented the same burdensome requirements that resulted in thousands losing health care coverage with virtually no effect on employment.  Hard-to-navigate work requirements will do little for unemployment and instead keep qualified Arizonans off of needed health coverage.

New Rule Places Burden on Already Strained Health Care Systems

States are concerned that the administrative burden for the new rule will fall to already-strapped clinics and healthcare systems. With a lack of clarity from the federal government on the appropriate documentation for proving that someone is too sick to work, experts fear that individual doctors will be responsible for evaluating each Medicaid enrollee seeking a medical exemption. Particularly in rural areas, where access to care is already limited, this would be a burden on doctors’ time and force doctors to make decisions they are not trained to make. Longer processing times and additional documentation requirements also increase the likelihood that eligible patients lose coverage because of administrative delays. The effects won't stop with the people who lose coverage. Rural hospitals and community health centers depend on Medicaid reimbursements to keep their doors open. When more people become uninsured, hospitals have to absorb the cost of care, emergency rooms become the default for routine visits, and costs are felt across Arizona's health care system. 

What Comes Next

People are expected to begin losing coverage on January 1, 2027. AHCCCS must notify affected enrollees by September 1, meaning many Arizonans have not yet learned whether they will be subject to the harsh new requirements.

Medicaid expansion has helped hundreds of thousands of Arizonans get preventive care, manage chronic illnesses, and avoid crushing bills. But H.R. 1’s changes could leave eligible Arizonans uninsured while putting new financial strain on the doctors, hospitals, and clinics that care for them – to finance tax breaks for billionaires.